Li Keqiang: Ex-Chinese premier sidelined by Xi dies; RIP Li Keqiang, Who Retired With a Broken Heart

China, U.S. release dueling videos with accusations of provocation; SMIC, Huawei chip advances will continue despite US sanctions, says TSMC veteran

Welcome to this issue of The China Brief. Today is October 27, 2023. Here at The China Brief, we bring you the latest news on China's politics, economy, and society from global media sources, along with exclusive expert analysis. If you find our content helpful, please subscribe to our newsletter.

Li Keqiang: in China and overseas, tributes flow for warm, capable former premier

South China Morning Post

Former Chinese Premier Li Keqiang has died suddenly at the age of 68 after suffering a heart attack. Li, who was visiting Shanghai at the time of his death, was known for his energetic and capable leadership. The news of his death shocked China and the global community, with condolences pouring in from foreign diplomats, business leaders, and China experts. Li was remembered as "the people's premier" for his caring and down-to-earth personality. He was the first top Chinese leader to visit the epicentre of the Covid-19 pandemic in Wuhan and was praised for his support of medical workers and the street-stall economy during the crisis. Li was also recognized for his significant role in bilateral relations with Japan and received condolences from Japanese Chief Cabinet Secretary Hirokazu Matsuno. The European Union Chamber of Commerce in China expressed deep sadness at Li's death, describing him as an important interlocutor for foreign businesses in China. Li's sudden passing has left a void in Chinese leadership and has raised questions about the future direction of the country.x

Li Keqiang: Ex-Chinese premier sidelined by Xi dies

BBC

Former Chinese Premier Li Keqiang has died of a heart attack at the age of 68. He was once seen as a future leader of China but was overtaken by President Xi Jinping. Li, a trained economist, held the second-highest position in China but was increasingly isolated among the country's top leadership. His death means the loss of a moderating voice within the Chinese Communist Party, allowing President Xi to exercise even more power and authority. Li is best known outside of China for the Li Keqiang index, an informal measurement of China's economic progress.

Chinese hedge fund High Flyer Quant suspends founder citing risk to reputation

South China Morning Post

High-Flyer Quant, a leading Chinese hedge fund manager, has suspended co-founder and senior executive Xu Jin due to his "improper handling of a family matter." The firm did not specify what Xu had done, his role in the company, or the duration of his suspension. High-Flyer Quant owns two asset management units overseeing over CNY 40bn ($5.47bn) of assets. The firm said the suspension will not affect the operations of the underlying funds.

The sudden death of former China's No. 2 leader Li Keqiang has shocked many

Yahoo US

The sudden death of former Chinese official Li Keqiang has shocked many people in China. Li was China's top economic official for a decade and was known for his advocacy of private business. However, he lost much of his influence as President Xi Jinping accumulated greater powers. Li's death has drawn over 1 billion views on Chinese social media, with many users expressing their condolences. U.S. Secretary of State Antony Blinken and Japan's embassy in China have also expressed their condolences. Li had been seen as a potential successor to former Communist Party leader Hu Jintao but was not chosen due to the need to balance party factions.

China FM calls for 'stable' US ties on visit to weigh Xi summit

Yahoo US

China's Foreign Minister Wang Yi has visited the United States to improve relations between the two countries, ahead of a potential visit by President Xi Jinping next month. While President Joe Biden has extended an invitation to Xi to participate in the Asia-Pacific Economic Cooperation Summit, the US has maintained targeted sanctions and supported allies, including the Philippines and Taiwan, over disputes with China. Wang said China seeks to "expand common ground" and stabilise relations with the US, adding that differences will be responded to calmly.

RIP Li Keqiang, Who Retired With a Broken Heart

Bloomberg

Li Keqiang, the former premier of China, has died of a heart attack at the age of 68. Known for the Li Keqiang Index, which measures China's economic growth using alternative indicators, Li's career was cut short by a Communist Party power play. Despite holding the position of premier, Li had little influence in steering the economy as key institutions were controlled by the Communist Party and President Xi Jinping. Li's death marks the end of a political career filled with unrealized ambitions.

China Retailer Suning Talks Debt Extension With Major Creditors

Bloomberg

Chinese retailer Suning Appliance Group has proposed extending $6.1bn of unsecured debt by eight years in an effort to deal with a liquidity crunch. The company shared its proposal with an onshore creditor committee, which was established in September 2021 and has been working with Suning on its debt load. Suning has been facing liquidity stress since late 2020, and its founder, Zhang Jindong, waived his right to repayment of a 20 billion yuan investment from China Evergrande Group, raising concerns about the company's ability to pay its own debt. Suning's latest proposal involves paying 90% of the debt in noncash assets and the remaining 10% in cash installments over eight years.

China’s Woes Push Some of Europe’s Debt-Laden Companies to Brink

Bloomberg

The slowdown in China’s economy is impacting Europe’s junk credit markets, with companies struggling to manage their debt loads due to a decrease in demand from China. Wittur Holding, a German elevator component manufacturer, experienced a plunge in revenue after a real estate bubble burst in China. IGM Resins, owned by Astorg Partners, is at risk of running out of cash and Accolade Wines is struggling to refinance. The China slowdown is causing pain across multiple industries and Europe’s exports to China are set to decline for the first time since 2002, according to EU statistics.

Huawei reports its revenue inched higher in January-September despite US sanctions

Yahoo US

Chinese telecoms company Huawei generated $86.3bn in revenue for the first nine months of the year, an increase of 2.4% on 2020. The firm, which is not listed on any stock exchanges, has struggled since former US president Donald Trump put it on a blacklist in 2019. Huawei has since pivoted to help companies digitise, and has invested in technologies such as advanced computer chips and autonomous driving. The company has also recently launched its Mate 60 smartphone series in China, which uses domestically-made chips.

Beijing, Asean to start on third reading of South China Sea code of conduct

South China Morning Post

China and the Association of Southeast Asian Nations (ASEAN) have agreed to accelerate negotiations for a code of conduct in the South China Sea. The move comes amid rising tensions in the disputed waters, with Beijing claiming almost the entire resource-rich area. The code of conduct has been slow to progress, but countries have recently made efforts to accelerate negotiations. ASEAN members the Philippines, Vietnam, Malaysia, and Brunei dispute China's claims. The announcement also follows tensions between China and the Philippines after two collisions between their vessels near the contested Spratly Islands.

EU and China compete with global investment schemes

Deutsche Welle

The European Union’s Global Gateway initiative, aimed at encouraging investment in developing countries and emerging markets, should be seen as a way of offering a “better choice” than China’s Belt and Road Initiative, according to European Commission President Ursula von der Leyen. The EU is focusing on sustainable projects including renewable energy and vaccine production, while China’s investment has centred on infrastructure. The EU has 60 partners in its initiative, compared with China’s 150. The EU’s scheme is not exclusive and countries can participate in both projects.

China, U.S. release dueling videos with accusations of provocation

Japan Times

The US and China have released video footage accusing each other of provocative actions by military craft in the South China Sea. The Chinese clip alleged that on 19 August, the USS Ralph Johnson "conducted close-in harassment" against a Chinese navy task group during routine training, accusing the American destroyer of "several provocative actions". The US has accused China of militarising the South China Sea and has conducted freedom of navigation operations in the area to challenge Beijing's territorial claims.

Philippines Drops China Railway Deals, Seeks Other Funders

Bloomberg

The Philippines has decided not to pursue Chinese loans to fund three railway projects worth over $5 billion. The government has started discussions with other Asian countries for alternative financing deals after China appeared to lose interest in funding the projects. The decision to seek alternative financing options may result in delays to the infrastructure projects, which were initially expected to be completed as early as this year. The move comes amid rising tensions between the Philippines and China in the disputed South China Sea. However, the Transportation Secretary stated that the stalled loan agreements were not directly related to the geopolitical tensions.

E-commerce rivals Shein and Temu call a truce in US court battle

South China Morning Post

Chinese online platforms Shein and Temu have applied to end their legal disputes with each other in the US. The companies have filed joint declarations requesting that two legal cases be dismissed "without prejudice". The details of the settlements have not been disclosed. Shein's lawsuit against Temu alleged that the latter instructed social media influencers to make negative comments about Shein and tricked customers into downloading the Temu app using fake social media accounts. Temu, on the other hand, accused Shein of violating US antitrust law by forcing clothing manufacturers to sign loyalty oaths. Both companies have denied any wrongdoing.

Taiwan Parties Push Alliance Talks in Bid to Beat Ruling DPP

Yahoo US

Taiwan People’s Party leader Ko Wen-je, currently second in most polls ahead of Taiwan's January presidential election, said there have been multiple meetings with the Kuomintang on a potential alliance against the frontrunner, the ruling Democratic Progressive Party. Any tie-up would be welcomed by China, which is concerned at the pro-independence stance of the DPP. Both Ko’s party and the third-placed Kuomintang, or KMT, which ruled the island for decades, favor closer ties with Beijing.

SMIC, Huawei chip advances will continue despite US sanctions, says TSMC veteran

South China Morning Post

The US will not be able to prevent Chinese firms like Semiconductor Manufacturing International Corp (SMIC) and Huawei from making progress in chip technology, according to Burn J. Lin, a former Taiwan Semiconductor Manufacturing Co (TSMC) vice-president. SMIC and Huawei can use existing older machines to make even more sophisticated silicon. SMIC could advance to the next generation at 5 nanometres with machines from ASML Holding NV that it already operates, Lin said. He added that it is not possible for the US to completely prevent China from improving its chip technology.

US Can’t Halt SMIC, Huawei’s Tech Advances, Chip Guru Says

Bloomberg

The US will be unable to prevent Chinese companies such as Huawei and Semiconductor Manufacturing International Corp (SMIC) from advancing in chip technology, says Burn J. Lin, a former vice president of Taiwan Semiconductor Manufacturing Co. Lin believes SMIC can advance to the next generation of chipmaking by using existing machines from ASML Holding, and that China will experiment with new chip packaging and materials to create more powerful semiconductors. The US “should focus on maintaining its chip design leadership instead of trying to limit China’s progress,” Lin added.

Hong Kong stocks rise as more Chinese companies join buy-back plans

South China Morning Post

Hong Kong stocks have experienced their biggest rise in two weeks after several Chinese companies proposed buy-backs, boosting investor confidence. The Hang Seng Index rose 1.3% to 17,272.54, bringing the gain to 0.3% from last Friday. The Tech Index climbed 1.9%, while the Shanghai Composite Index added 0.2%. Companies such as JD.com, Wuxi Biologics, NetEase and Alibaba all experienced gains, while China Life Insurance suffered a 4.3% drop.

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